Christopher J Waller on U.S. Tariff Policies and Economic Outlook

This speech by Christopher J Waller, Member of the Board of Governors of the Federal Reserve System, analyzes the impact of recent U.S. tariff increases on the economy and monetary policy.

• Focuses on two tariff scenarios: a large tariff scenario (around 25% average tariff), and a smaller tariff scenario (around 10% average tariff).
• Highlights that tariffs represent a historic increase in trade barriers, affecting inflation, economic growth, and labor markets.
• Discusses expected temporary inflation spikes due to tariffs, with possible increases up to 5% annualized inflation in the large tariff scenario.
• Notes the potential for economic slowdown and higher unemployment, possibly close to 5%, if large tariffs persist.
• Emphasizes the uncertainty around trade policies and advocates for monetary policy flexibility based on evolving economic data.

The speech concludes that the U.S. economy is resilient but currently faces significant uncertainty from trade policy adjustments, demanding careful monetary policy responses.